WASHINGTON: The Financial Institutions and Consumer Credit Subcommittee, chaired by Rep. Shelley Moore Capito, approved three bills today to strengthen consumer protection and bring transparency, oversight and accountability to the Consumer Financial Protection Bureau (CFPB). On Thursday, May 12 the Full Committee will meet to consider the bills. To view summaries of the bills as well as responses to partisan attacks on the bills, click here.
Financial Institutions Subcommittee Chairman Capito said, “I am very pleased that my Subcommittee has passed three commonsense improvements to make the CFPB more accountable and transparent. No piece of legislation is perfect, and this is no exception. By working to improve the CFPB, we are strengthening its ability to protect consumers from unscrupulous actors while also ensuring that this massive bureau will have in place appropriate checks and balances now and in the future.”
Financial Services Committee Chairman Spencer Bachus said, “These are common sense bills that will bring accountability to this new, massive government bureaucracy. The accountability bills approved by the Subcommittee will ensure that the CFPB’s regulatory initiatives are balanced, protect all consumers, and are carried out in a manner that is consistent with the safety and soundness of the country’s financial system.”
The bills approved by the Subcommittee are:
The Responsible Consumer Financial Protection Regulations Act, introduced by Chairman Bachus, was approved by a vote of 13 to 7. The legislation does exactly what the House voted to do last year – place the CFPB under the direction of a five-member, bipartisan commission rather than a single director. Virtually all other independent agencies are governed by multi-member commissions, such as the Consumer Product Safety Commission, the FCC, and the SEC.
The Consumer Financial Protection Safety and Soundness Improvement Act, introduced by Rep. Sean Duffy, was approved by a vote of 13 to 9. The bill would clarify that the Financial Stability Oversight Council must set aside any CFPB regulation that is inconsistent with the safe and sound operations of U.S. financial institutions. Under the Dodd-Frank Act, the FSOC can stay CFPB regulations only if two-thirds of the FSOC’s 10 voting members decide that the regulation would put the safety and soundness of the country’s entire financial system at risk. In addition, the bill would change the vote required to set aside regulations from two-thirds of the FSOC to a simple majority and would give the FSOC sufficient time to consider the safety and soundness implications of rules.
The Bureau of Consumer Financial Protection Transfer Clarification Act, introduced by Subcommittee Chairman Capito, was approved by a vote of 13 to 8. The legislation ensures a Senate-confirmed Director of the CFPB is in place before the transfer of regulatory authority to the new bureau takes place. If the CFPB does not have a Senate-confirmed Director by July 21, the Bureau may continue to operate under the Treasury Secretary’s authority.
Because the Dodd-Frank Act places so much authority – with such little accountability – in the hands of a CFPB Director, the law requires the Director to be nominated by the President and confirmed by the Senate. Yet it has been more than nine months since the Dodd-Frank Act was signed into law and the President has yet to nominate anyone for this position.